RENDER - The International Magazine for Rendering

Same Issues, Different Day

By Tina Caparella

Continual export market challenges and battles against grease theft gave members of the National Renderers Association (NRA) much to discuss at its spring business meetings held in late April in Chicago, IL.

The International Market Development Committee (IMDC) started the week off with its strategic planning meeting where Deborah Baldwin, Vantage Oleochemicals, enlightened members on the important role tallow plays in the oleochemical industry, which she dubbed the original green chemistry. The oleochemical industry in the United States (US) is a two billion pound market, or 20 percent of the US fats and greases production, and has been the most consistent market for packers and renderers, Baldwin noted. She added that 70 percent of products consumed by oleochemicals come from tallow and warned that palm oil is a threat, albeit temporary, to the rendering and oleochemical industries. Due to its lower price, customers are beginning to ask for palm oil-based products over tallow-based products, but Baldwin emphasized that feedstock switching costs are high and palm oil stocks are not always reliable, hence the preference for tallow.

“Animal fats are not a waste product and we must be careful not to classify it as such,” Baldwin stated. “Tallow is a viable raw material that is a product used [in oleochemicals] for 100 years.”

Market updates from around the globe were given next by NRA regional directors, beginning with Bruce Ross, Ross Gordon Consultants, who had both good and bad news from Europe. The good news, he explained, is that the European Commission has reauthorized swine and poultry processed animal proteins from animals fit for human consumption in aquaculture feeds beginning June 1, 2013, and the aquaculture industry is pleased with this step.

“Whether the market takes it or not is another matter,” Ross remarked, going on to say that the commission has proposed further relaxing of the feed ban possibly as early as 2014. Another bit of good news is the European Union (EU) remains committed to a 10 percent target to replace the domestic diesel supply with renewable fuels; however, there is a shortage of biodiesel feedstocks in the region and with the EU favoring second-generation (i.e., waste) feedstocks, there is an opportunity for increased US and Canadian rendered product exports.

Now for the bad news: after an agreement was put in place on the technical processing of US and Canadian tallow exported to the EU, it now appears the commission is back-stepping and requiring a more stringent processing standard, something US and Canadian renderers will find difficult to meet. Currently, used cooking oil is allowed to be imported into the EU for biodiesel use, but this product, of which 130,000 metric tons were exported to the EU in 2012, may fall under the new regulations affecting tallow.

Ross also reported that the European oleochemical industry wants more tallow but can currently only import category 2 material (from animals at risk of contamination with diseases other than bovine spongiform encephalopathy) for some uses (i.e., soap, inorganic fertilizers, lubricants). It was agreed that the tallow export situation in Europe is now at the political level.

NRA President Tom Cook explained that the US Department of Agriculture and US Trade Representative officials understand the industry’s position on tallow exports to the EU for biodiesel. The matter has been escalated to high levels at the White House in an effort for a positive resolution.

Peng Li, NRA regional director for Asia, had a little better news, including Malaysia taking 10,000 metric tons of meat and bone meal on a trial basis, but noted the Indonesia market is still closed to US rendered products. Although China produces about one million metric tons of soap annually, the country’s imports of US tallow have dropped by nearly half over the last four years. Li has been educating Chinese soap industry delegates on the safety of US tallow in an attempt to re-invigorate imports, and has been vigorously working with Indonesian authorities in an effort to reopen that market.

Heading south of the US border was NRA Regional Director German Davalos, who revealed that at 28.5 million metric tons, Mexico is the fourth largest feed producer in the world behind China, the United States, and Brazil. Poultry consumed about half of that feed, with dairy, pork, and beef taking most of the remainder. Davalos described how the poultry industry in Mexico has been struggling the past few years, first with rising feed costs, then with an outbreak of avian influenza in 2012 that saw losses of 22 million layer hens, $33 million in feed sales, and $600 million to the egg industry. Mexico imported 106,000 metric tons of US animal protein meals in 2012, a 14 percent increase over the previous year. Davalos noted that Ecuador, the number one shrimp producer in Latin America, is another important market for US rendered products and is growing, but pointed out that certain countries in the region are importing more European animal proteins.

Kent Swisher, vice president, NRA International Programs, covered other parts of the world, including Morocco, where he sees an opportunity to export 100,000 metric tons of processed animal proteins to the 23-plus feed companies that produce 2.2 million metric tons of feed annually.

The IMDC received a donation of $15,000 from the Pacific Coast Renderers Association and $10,000 from the NRA’s eastern region members.

Business Matters

Established last fall in response to the ever-increasing frustrations over the theft of used cooking oil at restaurants, NRA’s Grease Theft Task Force met in January and again at the spring meeting in late April with the goal of bringing awareness of the problem to federal law enforcement, such as the Department of Justice (DOJ) and Federal Bureau of Investigations. The meeting was well attended, signifying the magnitude of the situation, and began with Charles Gittins, Valley Proteins, reporting that a meeting will be held early this summer to brief DOJ on current theft data and criminal cases throughout the country. NRA members were reminded of the importance to provide any completed and/or open case information that has a federal violation (i.e., interstate transfer of stolen grease) and provide grease theft data requested in an earlier survey.

“A lot of money has been earmarked for this problem,” stated John Mahoney, Mahoney Environmental. “Everyone is expected to step-up.”

Micah Salsman, Birmingham Hide and Tallow, shared a brochure the company has developed to educate anyone necessary on grease theft, and Chuck Neece, Farmers Union Industries, reported that model legislation has been introduced in Minnesota with the goal of it becoming law by 2014.

NRA committees addressed various issues, beginning with the Animal Protein Producers Industry, where Dr. David Meeker, vice president, NRA Scientific Services, reported that 120 rendering plants representing about 95 percent of US production are now certified under the industry’s Code of Practice, a third-party certification program. Carlos Gonzalez, Novus, explained that the company is still working diligently on its petition to the Food and Drug Administration (FDA) to expand the use of ethoxyquin in rendered products, but that the Center for Veterinary Medicine (CVM) has recently asked for additional requirements. Gonzalez stated CVM does not view ethoxyquin in rendered products as a priority issue.

The Communications Committee shared a video about rendering developed by FDA in order to train the thousands of new inspectors due to be hired under the Food Safety and Modernization Act. A second video created by NRA and its members to educate the public on rendering was also shown. Once the video has been finalized, it will be posted on various websites, including YouTube.

Environmental issues continue to be perplexing and far-reaching as Committee Chairman Bob Vogler, Valley Proteins, pointed out. One bright spot was that the final rules on boilers (maximum achievable control technology and commercial and industrial solid waste incineration) aren’t as onerous as originally written thanks to NRA’s responses to the proposed rules over the years. Under the new rule, language has been added that benefits the burning of animal fats in boilers and allows the use of liquid biofuels, a category that appears to include fat.

“Thus, there is reasonable level of comfort that renderers can burn fat as a liquid biofuel and sell to customers as a fuel as long as we document that the fat meets the legitimacy criteria, a relatively easy thing to do,” Vogler commented. However, he urged renderers to hire a technical consultant on the boiler MACT rules as they are quite complex.

Steve Kopperud, Policy Directions, reviewed the background of Gina McCarthy, nominee for Environmental Protection Agency (EPA) administrator, pointing out that she has worked under both President Bush’s and President Bill Clinton’s administrations.

“As a career regulator, she has a more real-world perspective,” Kopperud stated.

The NRA Biofuels Committee convened next, with Kopperud sharing that the US House of Representatives Energy and Commerce Committee has released a series of Renewable Fuel Standard (RFS) white papers examining a number of issues. Livestock groups and the petroleum industry are fighting against the RFS, saying it’s archaic, raises feed costs, etc., and now the ethanol industry, although supportive of the standard, is reporting they can’t meet the current fuel volume requirement. Many small and mid-size ethanol plants closed last summer due to the high cost of corn. Kopperud speculated there may be a push in Congress next year to rewrite the standard.

Committee Chairman Chuck Neece revealed that two National Biodiesel Board (NBB) by-law changes are up for a vote: one would allow renewable diesel producers as members while the other would eliminate the eight specified director categories – currently broken down as two farmers, two renderers, and four biodiesel producers – and just have eight directors elected by straight vote without regard to type of membership. It was mentioned that only three renderers are involved with NBB at this time. Neece also stated that nearly 40 percent of ethanol plants produce corn oil that is now being used as a feedstock in biodiesel production.

Kopperud returned to speak to the Legislative Committee, noting that immigration will be the focus of Congress this year, predicting a new farm bill will be in place by August, and warning there will be a major duke out over genetically modified organisms (GMOs) that will affect everything, including feed. The argument on GMOs is that 64 other countries are already requiring labeling, so why isn’t the United States?

The NRA Board of Directors wrapped up the meetings with Cook announcing his retirement at the end of this year after serving as association president for 16 years. NRA board and staff members commended Cook for his dedication and service to the industry, with Meeker commenting, “Tom is living proof that you can be a nice guy and a great boss.”